Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income tax provision (benefit) for the years ended December 31, consists of the following (in thousands): 

	2021		2020		2019
Current:
Federal	$	134,111	$	4,877	$	82,484
State	14,508		2,614		6,421
Foreign	28,266		19,560		23,328
	176,885		27,051		112,233
Deferred:
Federal	(2,169)		(30,779)		18,760
State	(3,795)		(11,579)		402
Foreign	(1,708)		(1,721)		2,385
	(7,672)		(44,079)		21,547
	$	169,213	$	(17,028)	$	133,780

The components of Income (loss) before income taxes for the years ended December 31, were as follows (in thousands): 

	2021		2020		2019
Domestic	$	698,578	$	(81,522)	$	465,798
Foreign	120,659		65,792		91,617
	$	819,237	$	(15,730)	$	557,415

Income tax provision (benefit) differs from the amount that would be provided by applying the statutory U.S. corporate income tax rate for the years ended December 31, due to the following items (in thousands): 

	2021		2020		2019
Provision (benefit) at statutory rate	$	172,040	$	(3,303)	$	117,057
State taxes, net of federal benefit	16,568		822		14,165
Foreign rate differential	4,303		60		1,665
Foreign derived intangible income	—		—		(3,108)
Research and development credit	(8,046)		(8,442)		(8,200)
Unrecognized tax benefits including interest and penalties	(6,554)		(8,567)		289
Valuation allowance adjustments	(1,928)		9,675		8,070
State credits	(5,403)		(13,106)		(4,704)
Global intangible low-taxed income	1,143		1,480		1,113
Adjustments for previously accrued taxes	(8,500)		(4,951)		(1,755)
Executive compensation limitation	3,104		2,543		2,620
Other foreign inclusions	34		4,415		4,202
Other	2,452		2,346		2,366
Income tax provision (benefit)	$	169,213	$	(17,028)	$	133,780

The 2017 Tax Cuts and Jobs Act subjects U.S. shareholders to current tax on global intangible low-taxed income (GILTI) earned by certain foreign subsidiaries for which a company can elect to either recognize deferred taxes or to provide tax expense in the year incurred. The Company has elected to account for GILTI in the year the tax is incurred.

The principal components of the Company’s deferred income tax assets and liabilities as of December 31, include the following (in thousands):

	2021		2020
Deferred income tax assets:
Accruals not yet tax deductible	$	133,150	$	142,100
Pension and postretirement healthcare plan obligations	—		6,499
Stock compensation	10,908		9,619
Net operating loss and research & development tax credit carryforwards	60,401		55,857
Other	66,245		78,051
	270,704		292,126
Valuation allowance	(33,596)		(38,072)
	237,108		254,054
Deferred income tax liabilities:
Depreciation, tax in excess of book	(66,301)		(74,579)
Pension and postretirement healthcare plan obligations	(67,741)		—
Other	(29,405)		(29,544)
	(163,447)		(104,123)
	$	73,661	$	149,931

The Company reviews its deferred income tax asset valuation allowances on a quarterly basis, or whenever events or changes in circumstances indicate that a review is required. In determining the requirement for a valuation allowance, the historical and projected financial results of the legal entity or consolidated group recording the net deferred income tax asset is considered, along with any positive or negative evidence including tax law changes. Since future financial results and tax law may differ from previous estimates, periodic adjustments to the Company’s valuation allowances may be necessary.

The Company's gross state net operating loss carryforwards were as follows at December 31, (in thousands):

Year of Expiration	2021		2020
2031	$	236,624	$	252,142
2033	46		49
2034	112		2,455
2035	7,882		7,800
2037	433		—
2038	5,601		3,992
2039	13,581		11,710
2040	34,613		29,836
2041	3,486		—
Indefinite	8,441		9,449
	$	310,819	$	317,433

The Company also had Wisconsin research and development credit carryforwards of $38.1 million at December 31, 2021, expiring in 2024-2036 and a foreign tax credit carryforward of $4.0 million expiring in 2030-2031.

At December 31, 2021, the Company had a deferred tax asset of $48.9 million related to its state net operating loss and Wisconsin research and development credit carryforwards and a deferred tax asset of $11.5 million related to foreign net operating losses.

The Company's valuation allowance was $33.6 million at December 31, 2021 and included $18.2 million related to state net operating loss and Wisconsin research and development credit carryforwards, $7.2 million related to foreign net operating loss carryforwards and $8.1 million related to other deferred tax assets. The change in the valuation allowance from prior year included an increase of $0.6 million related to state net operating loss and Wisconsin research and development credit carryforwards and a decrease of $5.1 million related to foreign operations.

The Company recognizes interest and penalties related to unrecognized tax benefits in Income tax provision (benefit). Changes in the Company’s gross liability for unrecognized tax benefits, excluding interest and penalties, were as follows (in thousands): 

	2021		2020
Unrecognized tax benefits, beginning of period	$	50,597	$	60,112
Increase in unrecognized tax benefits for tax positions taken in a prior period	35		1,649
Decrease in unrecognized tax benefits for tax positions taken in a prior period	(6,402)		(12,560)
Increase in unrecognized tax benefits for tax positions taken in the current period	3,188		3,092
Statute lapses	(2,340)		—
Settlements with taxing authorities	(222)		(1,696)
Unrecognized tax benefits, end of period	$	44,856	$	50,597

The amount of unrecognized tax benefits as of December 31, 2021 and 2020 that, if recognized, would affect the effective tax rate was $38.4 million and $43.8 million, respectively.

The total gross amount of benefit related to interest and penalties associated with unrecognized tax benefits recognized during 2021, 2020 and 2019 in the Consolidated statements of operations was $2.6 million, $2.1 million and $0.1 million, respectively.

The total gross amount of interest and penalties associated with unrecognized tax benefits recognized at December 31, 2021 and 2020 in the Consolidated balance sheets was $22.9 million and $25.5 million, respectively.

The Company does not expect a significant increase or decrease to the total amounts of unrecognized tax benefits related to continuing operations during the fiscal year ending December 31, 2022. However, the Company is under regular audit by tax authorities. The Company believes that it has appropriate support for the positions taken on its tax returns and that its annual tax provision includes amounts sufficient to pay any assessments. Nonetheless, the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year.

The Company or one of its subsidiaries files income tax returns in the U.S. federal and Wisconsin state jurisdictions and various other state and foreign jurisdictions. The Company is no longer subject to income tax examinations for Wisconsin state income taxes before 2017 or for U.S. federal income taxes before 2018.